Don't Be Evil: The Memo the Credit Card Companies Haven't Gotten

At least not yet.

Today's CNNMoney.com carries a nice roundup of the problems facing credit-card consumers, under the title "5 evil things credit card companies can (still) do". The top five:

1. Rate hikes (APRs now run as high as 36%, according to the Center for Responsible Lending (CRL) which sounds more like loan-sharking than banking to me);
   
2. New fees (since current legislation addresses only existing fees and practices);
   
3. Higher minimum monthly payments (in some cases, a sudden jump from 2% of the monthly balance to 5%);
   
4. Fewer rewards (some cash-back cards have gone from 2-3% to 1%); and
   
5. Slashed credit limits and canceled accounts (without so much as a call from the bank).

If you thought that the Credit CARD (Card Accountability, Responsibility, and Disclosure) Act of 2009, signed in May, and taking effect, in parts, from August of this year to February 2010 for most of the terms of the act, you were -- like me -- sadly mistaken.

The act was intended to ban unfair rate increases, prevent unfair fee traps, require plain sight / plain language disclosure of terms, provide a new level of accountability, and offer special protections for students and young people. (Click here for the White House press release at the time of the bill's signing) Sounds great, doesn't it?

But banks are taking advantage of this interim period to, for example, raise rates while they still can.

What's a consumer to do? Well, the easy answer is to stop using credit cards entirely (or at least to pay off the total amount owed every month).

Unfortunately, that's not an option for everyone (CRL research shows that a majority of low- and middle-income families depend on credit cards to pay for basic living expenses).

At least you can shop around for cards, and not to remain wedded to one simply because "I've had it for years." That takes time, of course -- something else a lot of us don't have -- but is better than nothing. Note, however, that abruptly canceling a card can negatively affect your credit score....

Banks, of course, will argue that these additional fees are necessary to protect themselves from fraud and non-payment (but -- who started handing out cards to every person with a pulse, not to mention the occasional family dog?). They have responsibilities to shareholders, they note.

But while these moves may add to the banks' bottom lines, the real bottom line is that they only increase the resentment that consumers feel towards the banks. If they think that the only thing that matters is this quarter's returns, then nothing I say or that we as consumers do will make a difference.

But if they believe that the long run matters, then they themselves should be pushing for greater transparency and accountability throughout the industry. Smart banks will get out in front of this parade.